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Advertising for Creditors – Does the Standard Practice Need an Update?

An estate trustee must ensure that the deceased’s debts have been discharged prior to making any distributions. This is usually done by advertising for creditors in a newspaper. With today’s emphasis on technology, however, is advertising in a newspaper still the most efficient way to reach potential creditors?

The Standard Practice

An estate trustee will usually not be personally responsible for paying the deceased’s debts, as debts are paid from estate assets. The estate trustee may be found personally responsible for debts, however, if they begin to distribute the estate prior to paying the deceased’s debts.

Updating standard practice.
“An estate trustee will usually not be personally responsible for paying the deceased’s debts, as debts are paid from estate assets.”

An estate trustee may avoid personal liability for failing to pay a debt of the estate if they advertise for creditors.  Section 53(1) of the Trustee Act provides personal protection for an estate trustee who advertises for creditors prior to distributing the estate assets.

The standard practice for advertising for creditors is to advertise in a newspaper three consecutive weeks in a location where the deceased lived and worked, and then wait at least one month from when the advertisement was first published to begin administration of the estate. The newspaper publisher will then usually send an Affidavit certifying that the estate trustee has properly provided notice to creditors. The Affidavit can be filed with the court as proof that the estate trustee has taken the proper precautions to advertise for creditors.

Does the Standard Practice Need an Update?

While the newspaper may be the most common means of advertising for creditors, is it the most efficient way to reach a creditor?

It is worth considering advertising for creditors online. Advertising through an online service may be more cost effective than in a newspaper. We have previously blogged on a service that provides online advertisements for creditors, and provides affidavits in support of the estate trustee’s advertisement. Using a service to publish notice to creditors has the potential to reach a larger majority of individuals, in a more cost-effective manner. Furthermore, the internet has the ability to provide information to creditors that may be located outside of the deceased’s jurisdiction, allowing for the advertisement to reach more individuals as compared to a newspaper advertisement that is generally confined to one jurisdiction.

As the Trustee Act does not specify the proper form of advertising for creditors, there is the potential for online services or cellphone applications to provide advertisements for creditors in a more efficient and effective way.

Thanks for reading,

Suzana Popovic-Montag

 

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